With the extremely low rates that banks pay on CD’s and the government pays on treasuries many investors who saved their money hoping to use their savings to generate income or at least a steady rate of return are often desperate enough to try placing their money into traditionally non-secure investments. In the following case from the SEC web site the SEC alleges that fraud was committed by an investment advisor who allegedly touted a rate of return that was not justified:
“Washington, D.C., May 13, 2011 – The Securities and Exchange Commission today charged a Monticello, N.Y.-based investment adviser with fraudulently offering and selling securities in two upstate New York real estate funds he managed.
The SEC alleges that Lloyd V. Barriger told investors in the Gaffken & Barriger Fund (G&B Fund) that it was a relatively safe and liquid investment that generated a minimum return of 8 percent per year. However, the fund’s actual performance did not justify these performance claims. The SEC further alleges that Barriger defrauded investors in Campus Capital Corp. by raising money from them to prop up the ailing G&B Fund without disclosing that was how their money was actually being used. Barriger also caused Campus to engage in other transactions that personally benefitted him, unbeknownst to Campus investors.
“In the midst of the credit crisis, Barriger chose to lie about the solvency and liquidity of his fund rather than admit the somber truth of a collapsing business,” said George Canellos, Director of the SEC's New York Regional Office. “He continued to solicit new investor funds based on the same misrepresentations up until the day before the fund collapsed.”
According to the SEC’s complaint filed in federal court in Manhattan, the G&B Fund raised approximately $20 million from January 1998 to March 2008, and Campus raised approximately $12 million from October 2001 to July 2008. Barriger froze the G&B Fund in March 2008 and disclosed its true financial condition to investors.
The SEC’s complaint alleges that Barriger misused G&B Fund assets by causing the fund to pay cash distributions of “Preferred Returns” to those investors who requested them. Barriger also caused the fund to redeem investors at values reflecting the purported accrued 8 percent per year return when the fund lacked the income to support those allocations and payments.
According to the SEC’s complaint, Barriger caused Campus to inject a total of nearly $2.5 million into the G&B Fund between August 2007 and April 2008 when the G&B Fund was in distress. Barriger did not disclose this information to investors.
The SEC’s complaint alleges that Barriger violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.
In its complaint, the SEC seeks a final judgment permanently enjoining Barriger from future violations of the foregoing provisions and ordering him to pay civil penalties and disgorgement of ill-gotten gains with prejudgment interest.
The SEC acknowledges the assistance of the U.S. Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation.”
Whether or not the SEC allegations are true will be determined. However, this might be more of a case of very poor judgment instead the out and out fraud cases that involve selling completely bogus securities or in targeting people for goal of stealing their hard earned cash.
I personally know what a difficult time it is to get people to make a large investment whether it is in real estate or an IRA. Of course it is always tempting to tweak the truth here and there in order to make the sale. The problem is that once you tweak the truth it is not much of a stretch to telling out and out lies to sell your product. Financial hard times make it easier still to take out some investor cash here and there in order to shore up personal finances. Many think they might pay it back one day but, financial hard times often stretch out long past the hoped for day of financial recovery. In short, it is easier to have some sympathy for those who commit fraud to save their business than for those who set up their business in order to commit fraud.
This is a photo of the National Register of Historic Places listing with reference number 7000063
Monday, June 6, 2011
Sunday, June 5, 2011
SEC MAKES CHARGES MAM WEALTH MANAGEMENT WITH FRAUD
On the Securities and Exchange Commission web site the SEC announced it has filed investment fraud charges as follows:
“U.S. Securities and Exchange Commission
Litigation Release No. 21921 / April 7, 2011
SECURITIES AND EXCHANGE COMMISSION v. MAM WEALTH MANAGEMENT, LLC, MAMW REAL ESTATE FUND GENERAL PARTNER, LLC, ALEX MARTINEZ, AND RAPHAEL R. SANCHEZ, Civil Action No. CV 11-2934 SJO (JCx) (C.D. Ca.)]
SEC CHARGES INVESTMENT ADVISER, FUND MANAGER AND TWO INDIVIDUALS WITH SECURITIES FRAUD INVOLVING CLIENT FUNDS
The Securities and Exchange Commission announced the filing of a civil injunctive action in U.S. District Court in Los Angeles, California against MAM Wealth Management, LLC (MAM), MAMW Real Estate General Partner, LLC (MAMW), Alex Martinez and Ralph Sanchez, alleging fraud in connection with client investments in a $10.3 million risky real estate venture. According to the Commission's complaint, from July 2007 through March 2009, Martinez, a MAM and MAMW principal, and Ralph Sanchez, a MAM registered representative and MAMW principal, had 50 of their advisory clients invest in MAM Wealth Management Real Estate Fund, LLC (Fund). The complaint alleges that Martinez and Sanchez misrepresented to some clients that the Fund was a safe, relatively liquid investment, was earning 9% per year, and would show profits in three years. The complaint alleges that they used their discretionary authority over other clients’ funds to invest them in the Fund, even though it was unsuitable for their conservative investment goals. The complaint alleges that many accounts were retirement accounts and that the Fund was an unsuitable investment for clients who did not have the ability and willingness to accept the risks of losing their entire investment. The complaint further alleges that the defendants caused the Fund to use client funds to make risky mortgage loans.
The complaint alleges that the defendants have violated the antifraud provisions of the federal securities laws, including violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder by MAM, MAMW, Martinez and Sanchez and Sections 206(1) and 206(2) of the Investment Advisers Act by MAM and Martinez and aiding and abetting violations of Sections 206(1) and 206(2) of the Investment Advisers Act by Sanchez. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and monetary penalties.”
“U.S. Securities and Exchange Commission
Litigation Release No. 21921 / April 7, 2011
SECURITIES AND EXCHANGE COMMISSION v. MAM WEALTH MANAGEMENT, LLC, MAMW REAL ESTATE FUND GENERAL PARTNER, LLC, ALEX MARTINEZ, AND RAPHAEL R. SANCHEZ, Civil Action No. CV 11-2934 SJO (JCx) (C.D. Ca.)]
SEC CHARGES INVESTMENT ADVISER, FUND MANAGER AND TWO INDIVIDUALS WITH SECURITIES FRAUD INVOLVING CLIENT FUNDS
The Securities and Exchange Commission announced the filing of a civil injunctive action in U.S. District Court in Los Angeles, California against MAM Wealth Management, LLC (MAM), MAMW Real Estate General Partner, LLC (MAMW), Alex Martinez and Ralph Sanchez, alleging fraud in connection with client investments in a $10.3 million risky real estate venture. According to the Commission's complaint, from July 2007 through March 2009, Martinez, a MAM and MAMW principal, and Ralph Sanchez, a MAM registered representative and MAMW principal, had 50 of their advisory clients invest in MAM Wealth Management Real Estate Fund, LLC (Fund). The complaint alleges that Martinez and Sanchez misrepresented to some clients that the Fund was a safe, relatively liquid investment, was earning 9% per year, and would show profits in three years. The complaint alleges that they used their discretionary authority over other clients’ funds to invest them in the Fund, even though it was unsuitable for their conservative investment goals. The complaint alleges that many accounts were retirement accounts and that the Fund was an unsuitable investment for clients who did not have the ability and willingness to accept the risks of losing their entire investment. The complaint further alleges that the defendants caused the Fund to use client funds to make risky mortgage loans.
The complaint alleges that the defendants have violated the antifraud provisions of the federal securities laws, including violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder by MAM, MAMW, Martinez and Sanchez and Sections 206(1) and 206(2) of the Investment Advisers Act by MAM and Martinez and aiding and abetting violations of Sections 206(1) and 206(2) of the Investment Advisers Act by Sanchez. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and monetary penalties.”
Friday, June 3, 2011
CFTC CHAIRMAN MAKES REMARKS ON TRANSPARENCY AND THE SWAPS MARKETS
The following remarks were made by Chairman Gary Gensler of the Commodity Futures Trading commission. These remarks are from the CFTC web site:
" Remarks, Bringing Transparency to the Swaps Markets, National Association of Corporate Treasurers Conference
Chairman Gary Gensler
June 2, 2011
Good afternoon. I thank the National Association of Corporate Treasurers and Tom Deas for inviting me to speak today. Both the Commodity Futures Trading Commission (CFTC) and I have benefited from your thoughtful input and constant attention to important issues with regard to the swaps marketplace during the legislative process and the rule-writing process to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The Dodd-Frank Act brings essential reform to the swaps markets that will benefit the American public and each of you in your roles as corporate treasurers.
Though I am speaking to you in my formal capacity as Chairman of a market regulatory agency, I also was once co-head of finance at a major firm. Like many of you, I helped oversee how a corporation funded itself, managed its risk and met its budget.
As the CFTC has been working to implement the Dodd-Frank Act, I also have had the opportunity to meet with numerous corporate end-users to discuss their perspectives on the derivatives marketplace.
A lot has changed in the 13 years since I last had a role similar to yours – and most of you are treasurers for non-financial organizations – but I think we share a view that the financial system needs to work for both corporate America and the economy as a whole. I think we also can agree that, in 2008, the financial system did not work for corporate America or the economy as a whole.
Derivatives in the 2008 Financial Crisis
The financial crisis was very real. I am sure that most of your organizations did not make budget in 2009 – or at least not your original budget. Many of you probably had trouble making budgets in 2010.
The effects of the crisis remain. We still have high unemployment, millions of homes that are worth less than their mortgages and pension funds that have not regained the value they had before the crisis. We still have significant uncertainty in the economy.
One reason we had the 2008 financial crisis was because we did not have the right financial regulations in place. The financial system and the financial regulatory system failed. They failed the American public and they failed American businesses. When AIG and Lehman Brothers failed, you paid the price. As Americans are still struggling, still out of work and still very careful with their spending, your businesses are directly affected.
Though there were many causes to the crisis, it is clear that swaps played a central role. They added leverage to the financial system with more risk being backed up by less capital. They contributed, particularly through credit default swaps, to the bubble in the housing market. They contributed to a financial system where institutions were thought to be not only too big to fail, but too interconnected to fail. U.S. taxpayers bailed out AIG with $180 billion when that company’s ineffectively regulated $2 trillion swaps portfolio, which was cancerously interconnected to other financial institutions, nearly brought down the financial system.
These events demonstrate how swaps – initially developed to help manage and lower risk – can actually concentrate and heighten risk in the economy and to the public.
Lowering Risk
A key piece of the derivatives reforms of the Dodd-Frank Act is to lower the risks to the overall economy that are posed by the swaps marketplace. As we were so surely reminded in 2008, your health – the health of corporate America – as well as the economic health of the country, is put at risk when the financial system falters. Therefore, though much of the Dodd-Frank Act was directed to the financial sector, its reforms are critical to the health of the overall economy and the health of your own prospects.
One of the challenges that the Dodd-Frank Act addresses is that, like so many other industries, the financial industry has gotten very concentrated around a small number of very large firms.
Adding to the challenge is the perverse outcome of the financial crisis, which may be that many people in the markets have come to believe that this handful of large financial firms will – if in trouble – have the backing of the taxpayers. As it is unlikely that we could ever ensure that no financial institution will fail – because surely, some will in the future – we must do our utmost to ensure that when those challenges arise, the taxpayers are not forced to stand behind those institutions and that these institutions are free to fail.
The Dodd-Frank Act addresses this in many ways beyond derivatives, but the derivatives piece is a critical component. The derivatives reforms lower risk throughout the economy by heightening market transparency and directly regulating dealers for their swaps activity.
In addition, it directly lowers interconnectedness in the swaps markets by requiring those standardized swaps that are entered into and amongst financial institutions to be brought to central clearing. Each of these reforms is critical to lowering the risk that the financial system and, in particular, the failure of a large financial institution, poses to all of your corporations and the economy as a whole.
Promoting Transparent, Open and Competitive Markets
A further benefit that reform will bring to the economy and you in your roles as corporate treasurers is making the swaps marketplace more transparent, open and competitive. This reform will bring real, tangible benefits to the corporations that you represent.
Each part of our nation’s economy relies on a well-functioning derivatives marketplace. The derivatives markets are used to hedge risk and discover prices. They initially emerged around the time of the Civil War as tools to allow producers and merchants to be certain of the prices of commodities that they planned to use or sell in the future.
Not many of you are active in the agriculture derivatives markets, but that is where the markets first emerged. Initially, there were derivatives on agricultural commodities, such as wheat, corn and cotton. These early derivatives, called futures, are currently regulated by the CFTC. After much debate, futures markets first came under regulation in the 1920s and 1930s and have been comprehensively regulated since.
The derivatives markets have grown from those agricultural futures through the 20th and 21st centuries to include swaps. I am sure that most of you in this room have used swaps to hedge risks in your business. Maybe you have hedged an interest rate risk or a currency risk. A commodity price risk or credit risk. The swaps markets provide corporations with a means of locking in rates or prices in one part of their business so that they can focus on what they are best at – whether it be producing goods or providing services.
Such price certainty allows companies to better make essential business decisions and investments. Thus, it is critical that market participants have confidence in the integrity of these price discovery markets.
While the derivatives market has changed significantly since swaps were first transacted in the 1980s, the constant is that the financial community maintains information advantages over their nonfinancial counterparties. When a Wall Street bank enters into a bilateral derivative transaction with one of the corporations represented in this room, for example, the bank knows how much its last customer paid for similar transactions. That information, however, is not generally made available to other customers or the public. The bank benefits from internalizing this information.
The Dodd-Frank Act includes essential reforms to bring sunshine to the opaque swaps markets. Economists and policymakers for decades have recognized that market transparency benefits the public.
The more transparent a marketplace is, the more liquid it is for standardized instruments, the more competitive it is and the lower the costs for hedgers, borrowers and, ultimately, their customers. This transparency would benefit the companies that comprise your investment portfolios.
The Dodd-Frank Act brings transparency in each of the three phases of a transaction.
First, it brings transparency to the time immediately before the transaction is completed, which is called pre-trade transparency. This is done by requiring standardized swaps – those that are cleared, made available for trading and not blocks – between or amongst financial entities to be traded on exchanges or swap execution facilities (SEFs), which are a new type of swaps trading platform created by the Dodd-Frank Act.
Exchanges and SEFs will allow investors, hedgers and speculators to meet in a transparent, open and competitive central market. Even if you, as corporate treasurers of nonfinancial entities, decide not to use exchanges or SEFs for your swaps transactions – because the Dodd-Frank Act says that you are not required to do so – you still will benefit from the transparent pricing and liquidity that such trading venues provide.
The Dodd-Frank Act mandates that all market participants have the ability to utilize SEFs and derivatives exchanges if they choose to do so. The statute requires these trading facilities “to provide market participants with impartial access to the market.” The CFTC’s proposed rules require SEFs to allow market participants to leave executable bids or offers that can be seen by the entire marketplace. That means that any market participant – a bank or a nonbank – a corporation or a financial institution – can choose if they want to hedge a risk and enter into a swap. This brings competition to the marketplace that improves pricing and lowers risk.
Corporate treasurers will benefit from markets that have competition. When you use the swaps markets, you are paying for a service to reduce your risk. You want a lot of people competing for that business. You want them to compete in a transparent marketplace where you will benefit from better pricing.
Second, the Dodd-Frank Act brings real-time transparency to the pricing immediately after a swaps transaction takes place. This post-trade transparency provides all end-users and market participants with important pricing information as they consider their investments and whether to lower their risk through similar transactions.
The CFTC’s proposed real-time reporting rules include provisions to protect the confidentiality of market participants. The rules also provide for a time delay for large swap transactions – or block trades.
Third, the Dodd-Frank Act brings transparency to swaps over the lifetime of the contracts. If the contract is cleared, the clearinghouse will be required to publicly disclose the pricing of the swap. If the contract is bilateral, swap dealers will be required to share mid-market pricing with their counterparties. Thus, you as corporate treasurers and the broader public will benefit from knowing the valuations of outstanding swaps on a daily basis.
Additionally, the Dodd-Frank Act brings transparency of the swaps markets to regulators through swap data repositories. The Act includes robust recordkeeping and reporting requirements for all swaps transactions so that regulators can have a window into the risks posed in the system and can police the markets for fraud, manipulation and other abuses.
Commercial End-User Exceptions
So far I have discussed what the Dodd-Frank Act will do to benefit corporate treasurers and the economy as a whole. Before I close, I will take a moment to address what the Act does not require.
First, the Act does not require non-financial end-users that are using swaps to hedge or mitigate commercial risk to bring their swaps into central clearing. The Act leaves that decision up to the individual end-users.
Second, there was a related question about whether corporate end-users would be required to post margin for their uncleared swaps. The CFTC has published proposed rules that do not require such margin.
Third, the Dodd-Frank Act maintains your ability to enter into bilateral swap contracts with swap dealers. You will still be able to hedge your company’s particularized risk, whatever it may be, through customized transactions.
Conclusion
In conclusion, the Dodd-Frank Act reforms are important to the economy and to each of the corporations you represent. Only with these reforms can we hope to lower the risk that taxpayers and your corporations would bear the costs if a large financial institution failed in the future.
Only with reform can the public get the benefit of transparent, open and competitive markets. That transparency, openness and competitiveness will directly benefit your corporations because they will lower your costs over time. These reforms will reduce risk in the swaps market similar to that which contributed to AIG’s failure and the 2008 financial crisis.
Thank you."
" Remarks, Bringing Transparency to the Swaps Markets, National Association of Corporate Treasurers Conference
Chairman Gary Gensler
June 2, 2011
Good afternoon. I thank the National Association of Corporate Treasurers and Tom Deas for inviting me to speak today. Both the Commodity Futures Trading Commission (CFTC) and I have benefited from your thoughtful input and constant attention to important issues with regard to the swaps marketplace during the legislative process and the rule-writing process to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The Dodd-Frank Act brings essential reform to the swaps markets that will benefit the American public and each of you in your roles as corporate treasurers.
Though I am speaking to you in my formal capacity as Chairman of a market regulatory agency, I also was once co-head of finance at a major firm. Like many of you, I helped oversee how a corporation funded itself, managed its risk and met its budget.
As the CFTC has been working to implement the Dodd-Frank Act, I also have had the opportunity to meet with numerous corporate end-users to discuss their perspectives on the derivatives marketplace.
A lot has changed in the 13 years since I last had a role similar to yours – and most of you are treasurers for non-financial organizations – but I think we share a view that the financial system needs to work for both corporate America and the economy as a whole. I think we also can agree that, in 2008, the financial system did not work for corporate America or the economy as a whole.
Derivatives in the 2008 Financial Crisis
The financial crisis was very real. I am sure that most of your organizations did not make budget in 2009 – or at least not your original budget. Many of you probably had trouble making budgets in 2010.
The effects of the crisis remain. We still have high unemployment, millions of homes that are worth less than their mortgages and pension funds that have not regained the value they had before the crisis. We still have significant uncertainty in the economy.
One reason we had the 2008 financial crisis was because we did not have the right financial regulations in place. The financial system and the financial regulatory system failed. They failed the American public and they failed American businesses. When AIG and Lehman Brothers failed, you paid the price. As Americans are still struggling, still out of work and still very careful with their spending, your businesses are directly affected.
Though there were many causes to the crisis, it is clear that swaps played a central role. They added leverage to the financial system with more risk being backed up by less capital. They contributed, particularly through credit default swaps, to the bubble in the housing market. They contributed to a financial system where institutions were thought to be not only too big to fail, but too interconnected to fail. U.S. taxpayers bailed out AIG with $180 billion when that company’s ineffectively regulated $2 trillion swaps portfolio, which was cancerously interconnected to other financial institutions, nearly brought down the financial system.
These events demonstrate how swaps – initially developed to help manage and lower risk – can actually concentrate and heighten risk in the economy and to the public.
Lowering Risk
A key piece of the derivatives reforms of the Dodd-Frank Act is to lower the risks to the overall economy that are posed by the swaps marketplace. As we were so surely reminded in 2008, your health – the health of corporate America – as well as the economic health of the country, is put at risk when the financial system falters. Therefore, though much of the Dodd-Frank Act was directed to the financial sector, its reforms are critical to the health of the overall economy and the health of your own prospects.
One of the challenges that the Dodd-Frank Act addresses is that, like so many other industries, the financial industry has gotten very concentrated around a small number of very large firms.
Adding to the challenge is the perverse outcome of the financial crisis, which may be that many people in the markets have come to believe that this handful of large financial firms will – if in trouble – have the backing of the taxpayers. As it is unlikely that we could ever ensure that no financial institution will fail – because surely, some will in the future – we must do our utmost to ensure that when those challenges arise, the taxpayers are not forced to stand behind those institutions and that these institutions are free to fail.
The Dodd-Frank Act addresses this in many ways beyond derivatives, but the derivatives piece is a critical component. The derivatives reforms lower risk throughout the economy by heightening market transparency and directly regulating dealers for their swaps activity.
In addition, it directly lowers interconnectedness in the swaps markets by requiring those standardized swaps that are entered into and amongst financial institutions to be brought to central clearing. Each of these reforms is critical to lowering the risk that the financial system and, in particular, the failure of a large financial institution, poses to all of your corporations and the economy as a whole.
Promoting Transparent, Open and Competitive Markets
A further benefit that reform will bring to the economy and you in your roles as corporate treasurers is making the swaps marketplace more transparent, open and competitive. This reform will bring real, tangible benefits to the corporations that you represent.
Each part of our nation’s economy relies on a well-functioning derivatives marketplace. The derivatives markets are used to hedge risk and discover prices. They initially emerged around the time of the Civil War as tools to allow producers and merchants to be certain of the prices of commodities that they planned to use or sell in the future.
Not many of you are active in the agriculture derivatives markets, but that is where the markets first emerged. Initially, there were derivatives on agricultural commodities, such as wheat, corn and cotton. These early derivatives, called futures, are currently regulated by the CFTC. After much debate, futures markets first came under regulation in the 1920s and 1930s and have been comprehensively regulated since.
The derivatives markets have grown from those agricultural futures through the 20th and 21st centuries to include swaps. I am sure that most of you in this room have used swaps to hedge risks in your business. Maybe you have hedged an interest rate risk or a currency risk. A commodity price risk or credit risk. The swaps markets provide corporations with a means of locking in rates or prices in one part of their business so that they can focus on what they are best at – whether it be producing goods or providing services.
Such price certainty allows companies to better make essential business decisions and investments. Thus, it is critical that market participants have confidence in the integrity of these price discovery markets.
While the derivatives market has changed significantly since swaps were first transacted in the 1980s, the constant is that the financial community maintains information advantages over their nonfinancial counterparties. When a Wall Street bank enters into a bilateral derivative transaction with one of the corporations represented in this room, for example, the bank knows how much its last customer paid for similar transactions. That information, however, is not generally made available to other customers or the public. The bank benefits from internalizing this information.
The Dodd-Frank Act includes essential reforms to bring sunshine to the opaque swaps markets. Economists and policymakers for decades have recognized that market transparency benefits the public.
The more transparent a marketplace is, the more liquid it is for standardized instruments, the more competitive it is and the lower the costs for hedgers, borrowers and, ultimately, their customers. This transparency would benefit the companies that comprise your investment portfolios.
The Dodd-Frank Act brings transparency in each of the three phases of a transaction.
First, it brings transparency to the time immediately before the transaction is completed, which is called pre-trade transparency. This is done by requiring standardized swaps – those that are cleared, made available for trading and not blocks – between or amongst financial entities to be traded on exchanges or swap execution facilities (SEFs), which are a new type of swaps trading platform created by the Dodd-Frank Act.
Exchanges and SEFs will allow investors, hedgers and speculators to meet in a transparent, open and competitive central market. Even if you, as corporate treasurers of nonfinancial entities, decide not to use exchanges or SEFs for your swaps transactions – because the Dodd-Frank Act says that you are not required to do so – you still will benefit from the transparent pricing and liquidity that such trading venues provide.
The Dodd-Frank Act mandates that all market participants have the ability to utilize SEFs and derivatives exchanges if they choose to do so. The statute requires these trading facilities “to provide market participants with impartial access to the market.” The CFTC’s proposed rules require SEFs to allow market participants to leave executable bids or offers that can be seen by the entire marketplace. That means that any market participant – a bank or a nonbank – a corporation or a financial institution – can choose if they want to hedge a risk and enter into a swap. This brings competition to the marketplace that improves pricing and lowers risk.
Corporate treasurers will benefit from markets that have competition. When you use the swaps markets, you are paying for a service to reduce your risk. You want a lot of people competing for that business. You want them to compete in a transparent marketplace where you will benefit from better pricing.
Second, the Dodd-Frank Act brings real-time transparency to the pricing immediately after a swaps transaction takes place. This post-trade transparency provides all end-users and market participants with important pricing information as they consider their investments and whether to lower their risk through similar transactions.
The CFTC’s proposed real-time reporting rules include provisions to protect the confidentiality of market participants. The rules also provide for a time delay for large swap transactions – or block trades.
Third, the Dodd-Frank Act brings transparency to swaps over the lifetime of the contracts. If the contract is cleared, the clearinghouse will be required to publicly disclose the pricing of the swap. If the contract is bilateral, swap dealers will be required to share mid-market pricing with their counterparties. Thus, you as corporate treasurers and the broader public will benefit from knowing the valuations of outstanding swaps on a daily basis.
Additionally, the Dodd-Frank Act brings transparency of the swaps markets to regulators through swap data repositories. The Act includes robust recordkeeping and reporting requirements for all swaps transactions so that regulators can have a window into the risks posed in the system and can police the markets for fraud, manipulation and other abuses.
Commercial End-User Exceptions
So far I have discussed what the Dodd-Frank Act will do to benefit corporate treasurers and the economy as a whole. Before I close, I will take a moment to address what the Act does not require.
First, the Act does not require non-financial end-users that are using swaps to hedge or mitigate commercial risk to bring their swaps into central clearing. The Act leaves that decision up to the individual end-users.
Second, there was a related question about whether corporate end-users would be required to post margin for their uncleared swaps. The CFTC has published proposed rules that do not require such margin.
Third, the Dodd-Frank Act maintains your ability to enter into bilateral swap contracts with swap dealers. You will still be able to hedge your company’s particularized risk, whatever it may be, through customized transactions.
Conclusion
In conclusion, the Dodd-Frank Act reforms are important to the economy and to each of the corporations you represent. Only with these reforms can we hope to lower the risk that taxpayers and your corporations would bear the costs if a large financial institution failed in the future.
Only with reform can the public get the benefit of transparent, open and competitive markets. That transparency, openness and competitiveness will directly benefit your corporations because they will lower your costs over time. These reforms will reduce risk in the swaps market similar to that which contributed to AIG’s failure and the 2008 financial crisis.
Thank you."
ASSISTANT ATTORNEY GENERAL PEREZ SPEAKS ON BANK SETTLEMENTS WITH SERVICEMEN AND SERVICEWOMEN
The following speech by Assistant Attorney General Thomas Perez discusses the settlements made by Bank of America and Saxon Mortgage with American servicemen these banks allegedly harmed. This excerpt is from the Department of Justice web site:
"Washington, D.C. ~ Thursday, May 26, 2011
Good afternoon. Thank you for joining us today to hear about two settlements that will provide critical relief for some of the men and women who serve our nation in the armed forces, and their families. I want to thank our partners at the Department of Defense for their help in these cases and in protecting the rights of servicemembers.
The Civil Rights Division enforces several laws designed to protect the rights of members of the military – so that their brave and selfless service doesn’t put them at risk of losing their jobs at home; so that they don’t have to forfeit their right to vote; so that they can be assured they and their families in the consumer context will not be penalized for their courageous decision to serve our nation.
The Servicemembers Civil Relief Act, or SCRA, provides critical additional consumer and other protections to the men and women serving our nation in the military – it was a recognition that those who are making great sacrifices to protect us deserve to know that we have their backs at home.
The law postpones, suspends, terminates, or reduces the amount of certain consumer debt obligations so that members of the armed forces can focus their full attention on their military responsibilities without adverse consequences for themselves or their families. This means that a soldier won’t have to worry that his or her car will be repossessed while they’re on the front lines overseas. It means that instead of worrying that their spouse and children will be evicted while they’re deployed, they can focus on the critical role they play in protecting our nation.
Among these protections is a prohibition on foreclosure of a servicemember’s property without first getting approval from the court if the servicemember purchased the property prior to entering military service. In the course of our investigations that led to the settlements we’re announcing today, we’ve seen the consequences that can occur when this provision is violated.
For example, we encountered a case involving a servicemember who was severely injured by an Improvised Explosive Device while serving in Iraq, breaking his back and causing traumatic brain injury. The servicer foreclosed on him, despite receiving notice on multiple occasions that he was serving in Iraq. He returned to the United States in a wheelchair with the prognosis that he would never walk again. He spent two years in recovery, during which time he re-learned how to walk and eventually run; however, he still suffers from the impact of the traumatic brain injury.
In another case, we encountered a victim who suffers from Post-Traumatic Distress Syndrome after a tour in Iraq in 2003-2004. Consequently, he regularly receives counseling and takes medication to address his nightmares and nervous condition. In an attempt to avoid foreclosure on his home, he notified the servicer of his active duty status and provided copies of his orders. However, the servicer foreclosed on him twice despite notice of his protected status. In addition, his credit score has been negatively impacted and he has been unable to obtain credit.
We cannot allow the members of our military – who have made great personal sacrifices on our behalf – to attempt to transition to civilian life only to find their credit ruined and their homes in danger because of their willingness to serve in the armed forces.
Today’s settlements will provide relief to men and women who were victims of such violations.
I am pleased to announce first that BAC Home Loans Servicing, LP, formerly known as Countrywide Home Loans Servicing, LP, a subsidiary of Bank of America Corporation, has agreed to pay a minimum of $20 million to settle a lawsuit alleging that the Bank foreclosed, without court orders, on the properties of about 160 servicemembers, in violation of the SCRA. This is by far the largest amount ever obtained by the Department in an SCRA case.
In addition, Saxon Mortgage Services, Inc. has agreed to pay $2.35 million in damages to servicemembers to settle similar allegations, providing relief for 18 servicemembers.
From at least January 1, 2006 through mid 2009, Bank of America/Countrywide and Saxon both failed to determine consistently whether the borrowers on whom they foreclosed were in military service or were otherwise protected by the SCRA, or foreclosed on properties despite having been informed by the servicemember of his or her military status. They have also agreed as part of these settlements to identify and compensate any servicemember wrongfully foreclosed upon from mid-2009 through the end of 2010.
In addition to actual monetary damages, Bank of America/Countrywide and Saxon will repair any servicemember’s negative credit reports and not pursue any remaining amounts owed under the mortgage.
Just as significant is that these settlements, moving forward, will put in place a number of measures to prevent violations including training and policy modifications, such as requiring that the servicer check the Department of Defense website and their own files to determine the military status of a person before they foreclose on him or her. These measures will not only prevent SCRA violations at Bank of America/Countrywide and Saxon, but will set an industry gold standard for all other servicers that to follow in meeting their obligations.
The case against Countrywide resulted from a referral by the United States Marine Corps three days prior to Countrywide’s scheduled foreclosure of a servicemember’s mortgage, despite the fact that the servicemember had sent Countrywide copies of his military orders. The servicemember was a reservist called to active duty and deployed to Iraq at the time of the threatened foreclosure. Countrywide cancelled the foreclosure sale after the United States opened its investigation.
The Department initiated its investigation of Saxon in response to an inquiry from counsel for Sergeant James Hurley, who resolved his claims against Saxon earlier this year in a confidential settlement.
On average, each victim in the Saxon case will receive $130,555 in monetary damages; in the Countrywide settlement, each victim will receive approximately $125,000 in monetary damages. However, the United States will distribute the funds based on the nature of each individual violation and the harm experienced by the servicemember. We will conduct a thorough review of the particular facts and circumstances of each case to determine the precise amount of relief due each servicemember.
These settlements hold the lenders responsible for ensuring that the rights of our men and women in the military are protected while they defend our country. They should send a strong message to lenders and services that they will be held accountable for their own unlawful practices, as well as the practices of others who serve as their agents, in conducting foreclosures in violation of the SCRA.
Although no one case can rectify the multitude of unlawful practices in the housing and lending market that proliferated over the last decade, this settlement represents an important piece of the Department’s comprehensive efforts to address the nationwide housing crisis. It is yet another example of the great work being done in coordination with the President’s Financial Fraud Enforcement Task Force. The Civil Rights Division, along with HUD and the Federal Reserve, chair the Task Force’s non-discrimination working group, and these settlements are an example of the work being done on behalf of victims of fair lending violations.
We will continue to aggressively enforce the law to protect all homeowners from unlawful lending practices, and to protect the rights of servicemembers who put their lives on the line on our behalf. They have our backs, and they need to know that we have theirs."
"Washington, D.C. ~ Thursday, May 26, 2011
Good afternoon. Thank you for joining us today to hear about two settlements that will provide critical relief for some of the men and women who serve our nation in the armed forces, and their families. I want to thank our partners at the Department of Defense for their help in these cases and in protecting the rights of servicemembers.
The Civil Rights Division enforces several laws designed to protect the rights of members of the military – so that their brave and selfless service doesn’t put them at risk of losing their jobs at home; so that they don’t have to forfeit their right to vote; so that they can be assured they and their families in the consumer context will not be penalized for their courageous decision to serve our nation.
The Servicemembers Civil Relief Act, or SCRA, provides critical additional consumer and other protections to the men and women serving our nation in the military – it was a recognition that those who are making great sacrifices to protect us deserve to know that we have their backs at home.
The law postpones, suspends, terminates, or reduces the amount of certain consumer debt obligations so that members of the armed forces can focus their full attention on their military responsibilities without adverse consequences for themselves or their families. This means that a soldier won’t have to worry that his or her car will be repossessed while they’re on the front lines overseas. It means that instead of worrying that their spouse and children will be evicted while they’re deployed, they can focus on the critical role they play in protecting our nation.
Among these protections is a prohibition on foreclosure of a servicemember’s property without first getting approval from the court if the servicemember purchased the property prior to entering military service. In the course of our investigations that led to the settlements we’re announcing today, we’ve seen the consequences that can occur when this provision is violated.
For example, we encountered a case involving a servicemember who was severely injured by an Improvised Explosive Device while serving in Iraq, breaking his back and causing traumatic brain injury. The servicer foreclosed on him, despite receiving notice on multiple occasions that he was serving in Iraq. He returned to the United States in a wheelchair with the prognosis that he would never walk again. He spent two years in recovery, during which time he re-learned how to walk and eventually run; however, he still suffers from the impact of the traumatic brain injury.
In another case, we encountered a victim who suffers from Post-Traumatic Distress Syndrome after a tour in Iraq in 2003-2004. Consequently, he regularly receives counseling and takes medication to address his nightmares and nervous condition. In an attempt to avoid foreclosure on his home, he notified the servicer of his active duty status and provided copies of his orders. However, the servicer foreclosed on him twice despite notice of his protected status. In addition, his credit score has been negatively impacted and he has been unable to obtain credit.
We cannot allow the members of our military – who have made great personal sacrifices on our behalf – to attempt to transition to civilian life only to find their credit ruined and their homes in danger because of their willingness to serve in the armed forces.
Today’s settlements will provide relief to men and women who were victims of such violations.
I am pleased to announce first that BAC Home Loans Servicing, LP, formerly known as Countrywide Home Loans Servicing, LP, a subsidiary of Bank of America Corporation, has agreed to pay a minimum of $20 million to settle a lawsuit alleging that the Bank foreclosed, without court orders, on the properties of about 160 servicemembers, in violation of the SCRA. This is by far the largest amount ever obtained by the Department in an SCRA case.
In addition, Saxon Mortgage Services, Inc. has agreed to pay $2.35 million in damages to servicemembers to settle similar allegations, providing relief for 18 servicemembers.
From at least January 1, 2006 through mid 2009, Bank of America/Countrywide and Saxon both failed to determine consistently whether the borrowers on whom they foreclosed were in military service or were otherwise protected by the SCRA, or foreclosed on properties despite having been informed by the servicemember of his or her military status. They have also agreed as part of these settlements to identify and compensate any servicemember wrongfully foreclosed upon from mid-2009 through the end of 2010.
In addition to actual monetary damages, Bank of America/Countrywide and Saxon will repair any servicemember’s negative credit reports and not pursue any remaining amounts owed under the mortgage.
Just as significant is that these settlements, moving forward, will put in place a number of measures to prevent violations including training and policy modifications, such as requiring that the servicer check the Department of Defense website and their own files to determine the military status of a person before they foreclose on him or her. These measures will not only prevent SCRA violations at Bank of America/Countrywide and Saxon, but will set an industry gold standard for all other servicers that to follow in meeting their obligations.
The case against Countrywide resulted from a referral by the United States Marine Corps three days prior to Countrywide’s scheduled foreclosure of a servicemember’s mortgage, despite the fact that the servicemember had sent Countrywide copies of his military orders. The servicemember was a reservist called to active duty and deployed to Iraq at the time of the threatened foreclosure. Countrywide cancelled the foreclosure sale after the United States opened its investigation.
The Department initiated its investigation of Saxon in response to an inquiry from counsel for Sergeant James Hurley, who resolved his claims against Saxon earlier this year in a confidential settlement.
On average, each victim in the Saxon case will receive $130,555 in monetary damages; in the Countrywide settlement, each victim will receive approximately $125,000 in monetary damages. However, the United States will distribute the funds based on the nature of each individual violation and the harm experienced by the servicemember. We will conduct a thorough review of the particular facts and circumstances of each case to determine the precise amount of relief due each servicemember.
These settlements hold the lenders responsible for ensuring that the rights of our men and women in the military are protected while they defend our country. They should send a strong message to lenders and services that they will be held accountable for their own unlawful practices, as well as the practices of others who serve as their agents, in conducting foreclosures in violation of the SCRA.
Although no one case can rectify the multitude of unlawful practices in the housing and lending market that proliferated over the last decade, this settlement represents an important piece of the Department’s comprehensive efforts to address the nationwide housing crisis. It is yet another example of the great work being done in coordination with the President’s Financial Fraud Enforcement Task Force. The Civil Rights Division, along with HUD and the Federal Reserve, chair the Task Force’s non-discrimination working group, and these settlements are an example of the work being done on behalf of victims of fair lending violations.
We will continue to aggressively enforce the law to protect all homeowners from unlawful lending practices, and to protect the rights of servicemembers who put their lives on the line on our behalf. They have our backs, and they need to know that we have theirs."
Thursday, June 2, 2011
SEC CHARGES AIC INC OF PONZI SCHEME INVOLVING THE ELDERLY
Anyone with elderly parents has to worry that they might become a victim of a financial fraudster. This is especially so because the elderly who have any savings at all, often receive unsolicited phone calls, e-mails and, land mail from people purporting to be from their bank, stock broker, insurance company etc. The following case is an excerpt from the sec web site. In it the SEC is alleging that a financial services company and others had set up a Ponzi scheme with many of the victims being the elderly:
April 18, 2011
“The Securities and Exchange Commission announced today that it filed a civil action in the United States District Court for the Eastern District of Tennessee against AIC, Inc., a financial services holding company for three broker-dealers and an investment adviser based in Richmond, Virginia, and its President and CEO, Nicholas D. Skaltsounis. The Complaint alleges that Skaltsounis devised and orchestrated an offering fraud and Ponzi scheme by offering and selling more than $7.7 million in AIC promissory notes and stock. Also named in the Complaint are AIC’s subsidiary, Community Bankers Securities, LLC (“CB Securities”), a broker-dealer, along with associated stockbrokers John B. Guyette, of Greeley, Colorado, and John R. Graves, of Pensacola, Florida, who was also an investment adviser.
The Complaint alleges that, from at least January 2006 through November 2009, Skaltsounis, directly and through registered representatives associated with CB Securities, including Guyette and Graves, fraudulently offered and sold AIC promissory notes and stock to at least 74 investors in at least 14 states, many of whom were elderly, unsophisticated brokerage customers of CB Securities. Skaltsounis, Guyette, and Graves misrepresented and omitted material information to investors relating to, among other things, the safety and risk associated with the investments, the rates of return on the investments, and how AIC would use the proceeds of the investments.
The Complaint also alleges that AIC promised to pay interest and dividends ranging from 9 to 12.5 percent on the promissory notes and stock knowing that it did not have the ability to pay those returns. AIC and its subsidiaries were never profitable. AIC earned de minimis revenue and its subsidiaries did not earn sufficient revenue to meet its expenses. Skaltsounis used the money raised from new investors to pay back principal and returns to existing investors in the nature of a Ponzi scheme. By early December 2009, Skaltsounis’ scheme collapsed when he could no longer solicit investments and recruit new investors to pay back existing investors.
The Commission seeks permanent injunctions and civil penalties against Skaltsounis, AIC, CB Securities, Guyette, and Graves for violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission also charged Graves with violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Commission also seeks disgorgement plus prejudgment interest against Skaltsounis, AIC, CB Securities, and Guyette. In addition, the Commission has charged AIC subsidiaries, Allied Beacon Partners, Inc. (f/k/a Waterford Investor Services, Inc.), Advent Securities, Inc., and CBS Advisors, LLC, as relief defendants seeking disgorgement of funds received from the fraudulent scheme.”
April 18, 2011
“The Securities and Exchange Commission announced today that it filed a civil action in the United States District Court for the Eastern District of Tennessee against AIC, Inc., a financial services holding company for three broker-dealers and an investment adviser based in Richmond, Virginia, and its President and CEO, Nicholas D. Skaltsounis. The Complaint alleges that Skaltsounis devised and orchestrated an offering fraud and Ponzi scheme by offering and selling more than $7.7 million in AIC promissory notes and stock. Also named in the Complaint are AIC’s subsidiary, Community Bankers Securities, LLC (“CB Securities”), a broker-dealer, along with associated stockbrokers John B. Guyette, of Greeley, Colorado, and John R. Graves, of Pensacola, Florida, who was also an investment adviser.
The Complaint alleges that, from at least January 2006 through November 2009, Skaltsounis, directly and through registered representatives associated with CB Securities, including Guyette and Graves, fraudulently offered and sold AIC promissory notes and stock to at least 74 investors in at least 14 states, many of whom were elderly, unsophisticated brokerage customers of CB Securities. Skaltsounis, Guyette, and Graves misrepresented and omitted material information to investors relating to, among other things, the safety and risk associated with the investments, the rates of return on the investments, and how AIC would use the proceeds of the investments.
The Complaint also alleges that AIC promised to pay interest and dividends ranging from 9 to 12.5 percent on the promissory notes and stock knowing that it did not have the ability to pay those returns. AIC and its subsidiaries were never profitable. AIC earned de minimis revenue and its subsidiaries did not earn sufficient revenue to meet its expenses. Skaltsounis used the money raised from new investors to pay back principal and returns to existing investors in the nature of a Ponzi scheme. By early December 2009, Skaltsounis’ scheme collapsed when he could no longer solicit investments and recruit new investors to pay back existing investors.
The Commission seeks permanent injunctions and civil penalties against Skaltsounis, AIC, CB Securities, Guyette, and Graves for violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission also charged Graves with violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Commission also seeks disgorgement plus prejudgment interest against Skaltsounis, AIC, CB Securities, and Guyette. In addition, the Commission has charged AIC subsidiaries, Allied Beacon Partners, Inc. (f/k/a Waterford Investor Services, Inc.), Advent Securities, Inc., and CBS Advisors, LLC, as relief defendants seeking disgorgement of funds received from the fraudulent scheme.”
Wednesday, June 1, 2011
INVESTOR BULLETINS FROM THE SEC
The following SEC Investor Bulletins are excerpts from the SEC web site:
Investor Bulletin: Indexed Annuities
Tuesday, April 26, 2011, 10:17:39 AM
An indexed annuity is a type of contract between you and an insurance company. During the accumulation period, when you make either a lump sum payment or a series of payments, the insurance company credits you with a return that is based on changes in a securities index, such as the S&P 500 Composite Stock Price Index.
Investor Bulletin: Say on Pay and Golden Parachute Votes
Wednesday, April 13, 2011, 10:17:39 AM
The Office of Investor Education and Advocacy is issuing this Investor Bulletin to help investors understand new rules about shareholder votes on Say on-Pay and golden parachutes. The rules concern three separate non-binding shareholder votes on executive compensation: Say-on-Pay Votes, Frequency Votes and Golden Parachute Disclosures.
Investor Alert: Pre-IPO Investment Scams
Friday, March 18, 2011, 10:17:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to warn you about investment scams that purport to offer investors the opportunity to buy pre-IPO shares of Facebook, Twitter, Groupon, or other popular companies.
Investor Bulletin: Trading Basics
Tuesday, March 08, 2011, 11:17:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors about the different types of orders they can use to buy and sell stocks through a brokerage firm. The following are general descriptions of some of the common order types and trading instructions that investors may use to buy and sell stocks. Please note that some of the order types and trading instructions described below may not be avail-able through all brokerage firms. Furthermore, some brokerage firms may offer additional order types and trading instructions not described below. Investors should contact their brokerage firms to determine which types of orders and trading instructions are available for buying and selling as well the brokerage firms’ specific policies regarding such available orders and trading instructions.
Investor Bulletin: Margin Rules for Day Trading
Tuesday, February 08, 2011, 11:17:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors regarding the margin rules that apply to day trading in a Regulation T margin account and to respond to a number of frequently asked questions we have received.
Investor Bulletin: New Rules Give Customers Option of All Public Arbitration Panels
Thursday, February 03, 2011, 11:17:39 AM
Investor Bulletin: New Rules Give Customers Option of All Public Arbitration Panels
Money Market Funds: Staff Responses to Questions about Information Filed on Form N-MFP
Monday, January 31, 2011, 11:17:39 AM
Money Market Funds: Staff Responses to Questions about Information Filed on Form N-MFP
Investor Bulletin on Life Settlements
Thursday, January 20, 2011, 10:17:39 AM
The Office of Investor Education and Advocacy is issuing this Investor Bulletin to highlight information about life settlements and some of the risks these types of transactions may pose for investors. Individual investors considering a life settlement transaction may wish to keep the following points in mind and seek guidance from an unbiased financial professional who will not receive a commission or any other financial benefit from the transaction.
Trading in Cash Accounts
Tuesday, January 11, 2011, 11:56:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors regarding the rules that apply to trading securities in cash accounts and to highlight the 90-day account freeze which may arise with certain trading activities in these type of accounts.
Top 11 Tips for 2011
Wednesday, December 22, 2010, 10:56:39 AM
It’s that time of year -- the time to ring out the old and ring in the new, to ditch bad habits and replace them with good ones. We can’t guarantee you’ll lose weight, or become a better human being, but we can give you some suggestions to help you whip your finances into shape.
Investor Alert: BP Payout Recipients: Be on the Lookout for Investment Scams
Wednesday, October 13, 2010, 10:56:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to help educate investors, including individuals and small businesses receiving lump sum payouts from BP related to the oil spill in the Gulf, about potential investment frauds that target recipients of lump sum payouts.
Investor Alert: Investor Warning Regarding Web-Based Scheme Defrauding Deaf Investors
Wednesday, October 06, 2010, 10:56:39 AM
The Securities and Exchange Commission ("SEC") has charged an Internet-based investment company, Imperia Invest IBC ("Imperia"), with securities fraud for soliciting several million dollars from U.S. investors and promising guaranteed annual returns in excess of 300% while in reality siphoning the funds into foreign bank accounts and not paying any returns back to investors.
Investor Alert: Investors Beware of Government Impersonators
Tuesday, October 05, 2010, 10:56:39 AM
The staff of the United States Securities and Exchange Commission (SEC) is issuing this Investor Alert about an individual who is falsely representing to be an employee of the SEC and offering to provide assistance with settling federal tax obligations with the United States Internal Revenue Service.
Investor Bulletin: New Stock-by-Stock Circuit Breakers
Wednesday, September 22, 2010, 10:56:39 AM
The Securities and Exchange Commission approved rules on Sept. 10, 2010, to expand the existing circuit breaker program that currently is triggered by large, sudden price moves in an individual stock.
Investor Bulletin: Focus on Municipal Bonds
Monday, September 20, 2010, 10:56:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors about municipal bonds. For additional assistance, investors can call the SEC's Office of Investor Education and Advocacy at 1-800-SEC-0330, or ask a question using ours online form.
Investor Bulletin: Trading in Stock After an SEC Trading Suspension -- Be Aware of the Risks
Monday, August 30, 2010, 1:56:39 PM
Investors should be very cautious when considering trading in stock after the SEC has suspended trading in the shares. An SEC trading suspension is a "red flag", often indicating the SEC has concerns about the information that the company has been providing to the public. By law, an SEC suspension usually ends after ten business days, even if the company has not provided current, accurate information about itself. However, when a company does not provide current, reliable information about itself and its finances, trading its shares can be very risky.
Investor Bulletin: New Rule to Curb “Pay to Play” Practices
Thursday, July 29, 2010, 1:56:39 PM
The Securities and Exchange Commission approved a new rule on June 30, 2010 to curb so-called "pay to play" practices in which investment advisers make campaign contributions to elected officials in order to influence the award of contracts to manage public pension plan assets and other government investment accounts.
Investor Bulletin on Life Settlements
Thursday, July 29, 2010, 1:56:39 PM
We are issuing this Investor Bulletin to highlight information about life settlements and some of the risks these types of transactions may pose for investors. Individual investors considering a life settlement transaction may wish to keep the following points in mind and seek guidance from an unbiased financial professional who will not receive a commission or any other financial benefit from the transaction.
Investor Bulletin: Amendments to Form ADV – New Disclosure Requirements for Investment Advisers
Thursday, July 29, 2010, 1:56:39 PM
Investment advisers provide a wide range of advisory services and play an important role in helping individuals and institutions make significant financial decisions. To allow clients and prospective clients to evaluate the risks associated with a particular investment adviser, its business practices, and its investment strategies, it is essential that clients and prospective clients have clear disclosure that they are likely to read and understand. That is why the Securities and Exchange Commission (SEC) has adopted amendments to Part 2 of Form ADV to require investment advisers to provide new and prospective clients with a brochure and brochure supplements written in plain English. These amendments are designed to provide new and prospective clients with clearly written, meaningful current disclosure of the business practices, conflicts of interest, and background of the investment adviser firm and the firm’s employees who provide advice.
Investor Bulletin: Indexed Annuities
Tuesday, April 26, 2011, 10:17:39 AM
An indexed annuity is a type of contract between you and an insurance company. During the accumulation period, when you make either a lump sum payment or a series of payments, the insurance company credits you with a return that is based on changes in a securities index, such as the S&P 500 Composite Stock Price Index.
Investor Bulletin: Say on Pay and Golden Parachute Votes
Wednesday, April 13, 2011, 10:17:39 AM
The Office of Investor Education and Advocacy is issuing this Investor Bulletin to help investors understand new rules about shareholder votes on Say on-Pay and golden parachutes. The rules concern three separate non-binding shareholder votes on executive compensation: Say-on-Pay Votes, Frequency Votes and Golden Parachute Disclosures.
Investor Alert: Pre-IPO Investment Scams
Friday, March 18, 2011, 10:17:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to warn you about investment scams that purport to offer investors the opportunity to buy pre-IPO shares of Facebook, Twitter, Groupon, or other popular companies.
Investor Bulletin: Trading Basics
Tuesday, March 08, 2011, 11:17:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors about the different types of orders they can use to buy and sell stocks through a brokerage firm. The following are general descriptions of some of the common order types and trading instructions that investors may use to buy and sell stocks. Please note that some of the order types and trading instructions described below may not be avail-able through all brokerage firms. Furthermore, some brokerage firms may offer additional order types and trading instructions not described below. Investors should contact their brokerage firms to determine which types of orders and trading instructions are available for buying and selling as well the brokerage firms’ specific policies regarding such available orders and trading instructions.
Investor Bulletin: Margin Rules for Day Trading
Tuesday, February 08, 2011, 11:17:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors regarding the margin rules that apply to day trading in a Regulation T margin account and to respond to a number of frequently asked questions we have received.
Investor Bulletin: New Rules Give Customers Option of All Public Arbitration Panels
Thursday, February 03, 2011, 11:17:39 AM
Investor Bulletin: New Rules Give Customers Option of All Public Arbitration Panels
Money Market Funds: Staff Responses to Questions about Information Filed on Form N-MFP
Monday, January 31, 2011, 11:17:39 AM
Money Market Funds: Staff Responses to Questions about Information Filed on Form N-MFP
Investor Bulletin on Life Settlements
Thursday, January 20, 2011, 10:17:39 AM
The Office of Investor Education and Advocacy is issuing this Investor Bulletin to highlight information about life settlements and some of the risks these types of transactions may pose for investors. Individual investors considering a life settlement transaction may wish to keep the following points in mind and seek guidance from an unbiased financial professional who will not receive a commission or any other financial benefit from the transaction.
Trading in Cash Accounts
Tuesday, January 11, 2011, 11:56:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors regarding the rules that apply to trading securities in cash accounts and to highlight the 90-day account freeze which may arise with certain trading activities in these type of accounts.
Top 11 Tips for 2011
Wednesday, December 22, 2010, 10:56:39 AM
It’s that time of year -- the time to ring out the old and ring in the new, to ditch bad habits and replace them with good ones. We can’t guarantee you’ll lose weight, or become a better human being, but we can give you some suggestions to help you whip your finances into shape.
Investor Alert: BP Payout Recipients: Be on the Lookout for Investment Scams
Wednesday, October 13, 2010, 10:56:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to help educate investors, including individuals and small businesses receiving lump sum payouts from BP related to the oil spill in the Gulf, about potential investment frauds that target recipients of lump sum payouts.
Investor Alert: Investor Warning Regarding Web-Based Scheme Defrauding Deaf Investors
Wednesday, October 06, 2010, 10:56:39 AM
The Securities and Exchange Commission ("SEC") has charged an Internet-based investment company, Imperia Invest IBC ("Imperia"), with securities fraud for soliciting several million dollars from U.S. investors and promising guaranteed annual returns in excess of 300% while in reality siphoning the funds into foreign bank accounts and not paying any returns back to investors.
Investor Alert: Investors Beware of Government Impersonators
Tuesday, October 05, 2010, 10:56:39 AM
The staff of the United States Securities and Exchange Commission (SEC) is issuing this Investor Alert about an individual who is falsely representing to be an employee of the SEC and offering to provide assistance with settling federal tax obligations with the United States Internal Revenue Service.
Investor Bulletin: New Stock-by-Stock Circuit Breakers
Wednesday, September 22, 2010, 10:56:39 AM
The Securities and Exchange Commission approved rules on Sept. 10, 2010, to expand the existing circuit breaker program that currently is triggered by large, sudden price moves in an individual stock.
Investor Bulletin: Focus on Municipal Bonds
Monday, September 20, 2010, 10:56:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors about municipal bonds. For additional assistance, investors can call the SEC's Office of Investor Education and Advocacy at 1-800-SEC-0330, or ask a question using ours online form.
Investor Bulletin: Trading in Stock After an SEC Trading Suspension -- Be Aware of the Risks
Monday, August 30, 2010, 1:56:39 PM
Investors should be very cautious when considering trading in stock after the SEC has suspended trading in the shares. An SEC trading suspension is a "red flag", often indicating the SEC has concerns about the information that the company has been providing to the public. By law, an SEC suspension usually ends after ten business days, even if the company has not provided current, accurate information about itself. However, when a company does not provide current, reliable information about itself and its finances, trading its shares can be very risky.
Investor Bulletin: New Rule to Curb “Pay to Play” Practices
Thursday, July 29, 2010, 1:56:39 PM
The Securities and Exchange Commission approved a new rule on June 30, 2010 to curb so-called "pay to play" practices in which investment advisers make campaign contributions to elected officials in order to influence the award of contracts to manage public pension plan assets and other government investment accounts.
Investor Bulletin on Life Settlements
Thursday, July 29, 2010, 1:56:39 PM
We are issuing this Investor Bulletin to highlight information about life settlements and some of the risks these types of transactions may pose for investors. Individual investors considering a life settlement transaction may wish to keep the following points in mind and seek guidance from an unbiased financial professional who will not receive a commission or any other financial benefit from the transaction.
Investor Bulletin: Amendments to Form ADV – New Disclosure Requirements for Investment Advisers
Thursday, July 29, 2010, 1:56:39 PM
Investment advisers provide a wide range of advisory services and play an important role in helping individuals and institutions make significant financial decisions. To allow clients and prospective clients to evaluate the risks associated with a particular investment adviser, its business practices, and its investment strategies, it is essential that clients and prospective clients have clear disclosure that they are likely to read and understand. That is why the Securities and Exchange Commission (SEC) has adopted amendments to Part 2 of Form ADV to require investment advisers to provide new and prospective clients with a brochure and brochure supplements written in plain English. These amendments are designed to provide new and prospective clients with clearly written, meaningful current disclosure of the business practices, conflicts of interest, and background of the investment adviser firm and the firm’s employees who provide advice.
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